Stock Performance
Stock Performance
Q2 2019 FINANCIAL UPDATE
QUARTERLY REPORT OF THE U.S. INVESTOR-OWNED ELECTRIC UTILITY INDUSTRY
About EEI EEI is the association that represents all U.S. investor-owned electric companies. Our members provide electricity for 220 million Americans, and operate in all 50 states and the District of Columbia. As a whole, the electric power industry supports more than 7 million jobs in communities across the United States. In addition to our U.S. members, EEI has more than 60 international electric companies, with operations in more than 90 countries, as International Members, and hundreds of industry suppliers and related organizations as Associate Members. Organized in 1933, EEI provides public policy leadership, strategic business intelligence, and essential conferences and forums.
About EEI's Quarterly Financial Updates EEI's quarterly regulatory and financial updates present industry trend analyses and financial data covering 45 U.S. investor-owned electric utility companies. These 45 companies include 40 electric utility holding companies whose stocks are traded on major U.S. stock exchanges and five electric utilities who are subsidiaries of non-utility or foreign companies. Financial updates are published for the following topics:
Stock Performance Dividends Credit Ratings Rate Review Summary
EEI Finance Department material can be found online at: QFU.
For EEI Member Companies The EEI Finance and Accounting Division maintains current year and historical data sets that cover a wide range of industry financial and operating metrics. We look forward to serving as a resource for member companies who wish to produce customized industry financial data and trend analyses for use in:
Investor relations studies and presentations Internal company presentations Performance benchmarking Peer group analyses Annual and quarterly reports to shareholders
We Welcome Your Feedback EEI is interested in ensuring that our publications and industry data sets best address the needs of member companies and the regulatory and financial communities. We welcome your comments, suggestions and inquiries.
Contacts Mark Agnew Senior Director, Financial Analysis (202) 508-5049, magnew@
Michael Buckley Senior Manager, Financial Analysis (202) 508-5614, mbuckley@
Bill Pfister Senior Director, Business Analytics (202) 508-5531, bpfister@
Steve Frauenheim Senior Manager, Business Analytics (202) 508-5580, sfrauenheim@
Devin James Manager, Investor Relations & ESG (202) 508-5057, djames@
Future EEI Finance Meetings EEI Financial Conference November 10-13, 2019 Orlando World Center Marriott Orlando, Florida
For more information about future EEI Finance Meetings, please contact Devin James at (202) 508-5057 or djames@.
Edison Electric Institute 701 Pennsylvania Avenue, N.W. Washington, D.C. 20004-2696 202-508-5000
The 45 U.S. Investor-Owned Electric Utilities
The companies listed below all serve a regulated distribution territory. Other utilities, such as transmission provider ITC Holdings, are not shown below because they do not serve a regulated distribution territory. However, their financial information is included in relevant EEI data sets, such as transmission-related construction spending.
ALLETE, Inc. (ALE) Alliant Energy Corporation (LNT) Ameren Corporation (AEE) American Electric Power Company, Inc. (AEP) AVANGRID, Inc. (AGR) Avista Corporation (AVA) Berkshire Hathaway Energy Black Hills Corporation (BKH) CenterPoint Energy, Inc. (CNP) Cleco Corporation CMS Energy Corporation (CMS) Consolidated Edison, Inc. (ED) Dominion Resources, Inc. (D) DPL, Inc. DTE Energy Company (DTE) Duke Energy Corporation (DUK) Edison International (EIX) El Paso Electric Company (EE) Entergy Corporation (ETR) Evergy, Inc. (EVRG) Eversource Energy (ES) Exelon Corporation (EXC) FirstEnergy Corp. (FE) Hawaiian Electric Industries, Inc. (HE) IDACORP, Inc. (IDA)
IPALCO Enterprises, Inc. MDU Resources Group, Inc. (MDU) MGE Energy, Inc. (MGEE) NextEra Energy, Inc. (NEE) NiSource Inc. (NI) NorthWestern Corporation (NWE) OGE Energy Corp. (OGE) Otter Tail Corporation (OTTR) PG&E Corporation (PCG) Pinnacle West Capital Corporation (PNW) PNM Resources, Inc. (PNM) Portland General Electric Company (POR) PPL Corporation (PPL) Public Service Enterprise Group Inc. (PEG) Puget Energy, Inc. Sempra Energy (SRE) Southern Company (SO) Unitil Corporation (UTL) WEC Energy Group, Inc. (WEC) Xcel Energy, Inc. (XEL)
Note: Companies shown in italics are not listed on U.S. stock exchanges for one of the following reasons they are subsidiaries of an independent power producer; they are subsidiaries of foreign-owned companies; or they were acquired by other investment firms.
Companies Listed by Category
(Based on Business Segmentation Data as of 12/31/2018)
Please refer to the Quarterly Financial Updates webpage for previous years' lists.
G iven the diversity of utility holding company corporate strategies, no single company categorization approach will be useful for all EEI members and utility industry analysts. Nevertheless, we believe the following classification provides an informative framework for tracking financial trends and the capital markets' response to business strategies as companies depart from the traditional regulated utility model.
Regulated Mostly Regulated
80% or more of total assets are regulated Less than 80% of total assets are regulated
Categorization is based on year-end business segmentation data presented in SEC 10-K filings, supplemented by discussions with and information provided by parent company IR departments.
The EEI Finance and Accounting Division continues to evaluate our approach to company categorization and business segmentation. In addition, we can produce customized categorization and peer group analyses in response to member company requests. We welcome comments, suggestions and feedback from EEI member companies and the financial community.
Regulated (35 of 45) Alliant Energy Corporation Ameren Corporation American Electric Power Company, Inc. Avista Corporation Black Hills Corporation Cleco Corporation CMS Energy Corporation Consolidated Edison, Inc. Dominion Resources, Inc. DPL Inc. Duke Energy Corporation Edison International El Paso Electric Company Entergy Corporation Evergy, Inc. Eversource Energy FirstEnergy Corp. IDACORP, Inc.
IPALCO Enterprises, Inc. MGE Energy, Inc. NiSource Inc. NorthWestern Corporation OGE Energy Corp. Otter Tail Corporation PG&E Corporation Pinnacle West Capital Corporation PNM Resources, Inc. Portland General Electric Company PPL Corporation Puget Energy, Inc. Sempra Energy Southern Company Unitil Corporation WEC Energy Group, Inc. Xcel Energy Inc.
Mostly Regulated (10 of 45)
ALLETE, Inc. AVANGRID, Inc. Berkshire Hathaway Energy CenterPoint Energy, Inc. DTE Energy Company Exelon Corporation Hawaiian Electric Industries, Inc. MDU Resources Group, Inc. NextEra Energy, Inc. Public Service Enterprise Group
Incorporated
Note: Companies shown in italics are not listed on U.S. stock exchanges for one of the following reasons they are subsidiaries of an independent power producer; they are subsidiaries of foreign-owned companies; or they were acquired by other investment firms.
Q2 2019
Stock Performance
HIGHLIGHTS
The EEI Index nearly matched the broad market's strong gain in the first half of 2019, rising 15.7% on a surprising and steady decline in long-term interest rates in the U.S. and in many overseas regions. The multi-year stagnation in power demand reasserted itself in the first half of 2019 as electric output fell 4.4% year-to-year. Analysts cited weather and slowing economic growth while some companies also noted the impact of trade tariffs on industrial demand. The industry's fundamental outlook was little changed. Utilities continue to pursue investment programs focused on regulated operations and target earnings growth rates in the mid-single digits with similar dividend growth. Rising interest rates are widely seen as the biggest macro threat facing utility investors, yet that's been said for years and rates just seem to fall. Stable fuel costs and low interest rates have kept utility bills down even with big investment programs. Pushback on rate increases needed to fund rising capex may become an issue if the economy enters recession and consumer incomes fall.
COMMENTARY
The EEI Index nearly matched the stock market's strong gain in the first half of 2019, rising 15.7% compared to the Dow Jones Industrial Average's 15.4% return, the S&P 500's 18.5% return and the Nasdaq Composite's 20.7% gain. The broad market recovered from its sharp Q4 2018 decline after the U.S. Federal Reserve signaled it would halt its multi-year rate hike campaign; the overnight Federal Funds rate had risen from 0.0% in late 2015 to 2.5% in December 2018.
I. Index Comparison (% Return)
Index EEI Index
2013 2014 2015 2016 2017 13.0 28.9 -3.9 17.4 11.7
Dow Jones Inds. 29.6 10.0 0.2 16.5 28.1
S&P 500
32.4 13.7
Nasdaq Comp.^ 38.3 13.4
1.4 12.0 21.8 5.7 7.5 28.2
Calendar year returns shown for all periods, except where noted. ^Price gain/loss only. Other indices show total return. Source: EEI Finance Department, S&P Global Market Intelligence
2018 3.7 -3.5 -4.4 -3.9
6 mo.
2019 15.7 15.4
18.5
20.7
II. Category Comparison (% Return)
Index All Companies Regulated Mostly Regulated Diversified
U.S. Investor-Owned Electric Utilities 2013 2014 2015 2016 2017 17.3 27.6 -2.0 22.2 11.6 17.0 28.9 -0.7 21.2 11.7 16.0 27.5 -3.7 24.6 11.3 47.5 6.6 -14.4 25.6 n/a*
2018 4.3 4.5 3.6
n/a*
6 mo.
2019 16.0
17.1 11.9 n/a*
Calendar year returns shown for all periods except where noted. Returns shown here are unweighted averages of constituent company returns. The EEI Index return shown in Table I above is cap-weighted. *Diversified category eliminated in 2017 due to lack of constituent companies. Source: EEI Finance Department, S&P Global Market Intelligence and company reports
III. Total Return Comparison
Value of $100 invested at close on 12/31/2014
EEI Index
S&P 500 Index
DJI
175
150
125
100
75 2015
2016
2017
2018
Source: EEI Finance Department, S&P Global Market Intelligence
2019YTD
1
EEI Q2 2019 Financial Update
2
STOCK PERFORMANCE
IV. 10-Year Treasury Yield -- Monthly
Average Monthly Yield, 1/1/1980 through 6/30/2019 16% 12%
8% 4% 0%
Source: U.S. Federal Reserve
V. 10-Year Treasury Yield -- Weekly
Daily Yield, 1/1/2008 through 6/30/2019 5% 4% 3% 2% 1%
Source: U.S. Federal Reserve
$/mmBTU 16.0 12.0 8.0 4.0 0.0
VI. Natural Gas Spot Prices
1/1/2008 through 6/30/2019, Henry Hub
Source: S&P Global Market Intelligence
VII. NYMEX Natural Gas Futures
$/mmBTU 8.0 7.0 6.0 5.0 4.0 3.0 2.0
August 2019 through December 2021, Henry Hub
6/30/2019 12/31/2017 12/31/2014
12/31/2018 12/31/2016 12/31/2010
Source: S&P Global Market Intelligence
EEI Q2 2019 Financial Update
VIII. Returns by Quarter
U.S. Investor-Owned Electric Utilities
Index
2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
EEI Index -5.4 0.5 6.1 2.4 2.7 0.1 -3.3 3.8 2.0 1.3 11.1 4.1
Dow Jones Industrials
2.8 8.7 5.2 4.0 5.3 11.3 -2.0 1.3 9.6 -11.3 11.8 3.2
S&P 500
Nasdaq Comp.^
3.9 3.8 6.1 3.1 4.5 6.6 -0.8 3.4 7.7 -13.5 13.7 4.3 9.7 1.3 9.8 3.9 5.8 6.3 2.3 6.3 7.1 -17.5 16.5 3.6
Category*
2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
All Companies -4.3 2.7 5.2 2.5 3.2 0.2 -3.0 5.3 1.4 0.8 10.6 4.9
Regulated
Mostly Regulated
Diversified
-4.3 1.9 5.8 2.7 3.5 -0.7 -3.5 5.4 2.0 0.7 10.6 5.9 -3.7 3.8 3.9 2.0 2.5 2.5 -1.9 5.0 -0.3 0.9 10.5 1.3 -7.8 9.5 n/a** n/a** n/a** n/a** n/a** n/a** n/a** n/a** n/a** n/a**
^Price gain/(loss) only. Other indices show total return. / * Returns shown here are unweighted averages of constituent company returns. The EEI Index return shown above is cap-weighted. ** Diversified category eliminated in 2017 due to lack of constituent companies. Source: EEI Finance Department, S&P Global Market Intelligence
IX. Sector Comparison, Trailing 6 mo. Total Return
For the six-month period ending 06/30/2019 Sector Technology Industrials Consumer Services Financials EEI Index Consumer Goods Basic Materials Utilities Oil & Gas Telecommunications Healthcare
Total Return
24.8% 24.4% 21.3% 19.5% 15.7% 15.7% 14.5% 14.4% 12.4% 12.1%
8.8%
Note: Sector Comparison page based on the Dow Jones U.S. Indexes, which are marketcapitalization-weighted indices. Source: EEI Finance Dept., Dow Jones & Company, Google Finance, Y Charts
X. Sector Comparison, Trailing 12 mo. Total Return
For the twelve-month period ending 06/30/2019
Sector
EEI Index Utilities Telecommunications Consumer Services Technology Industrials Healthcare Financials Consumer Goods Basic Materials Oil & Gas
Total Return
19.0% 18.2% 15.1% 13.8% 12.3% 12.2% 12.1%
9.6% 5.8% -1.9% -15.2%
Note: Sector Comparison page based on the Dow Jones U.S. Indexes, which are marketcapitalization-weighted indices. Source: EEI Finance Dept., Dow Jones & Company, Google Finance, Y Charts
STOCK PERFORMANCE
3
XI. Market Capitalization at June 30, 2019 (in $ Mil.)
U.S. Investor-Owned Electric Utilities
Company
Stock Symbol $ Market Cap
NextEra Energy, Inc.
NEE
97,985
Duke Energy Corporation
DUK
64,150
Dominion Energy, Inc.
D
61,322
Southern Company
SO
57,381
Exelon Corporation
EXC
46,550
American Electric Power Co, Inc. AEP
43,416
Sempra Energy
SRE
37,751
Xcel Energy Inc.
XEL
30,637
Public Service Enter. Group Inc. PEG
29,645
Consolidated Edison, Inc.
ED
28,277
WEC Energy Group, Inc.
WEC
26,303
Eversource Energy
ES
24,063
DTE Energy Company
DTE
23,274
FirstEnergy Corp.
FE
22,689
PPL Corporation
PPL
22,359
Edison International
EIX
21,976
Entergy Corporation
ETR
19,513
Ameren Corporation
AEE
18,394
CMS Energy Corporation
CMS
16,377
AVANGRID, Inc.
AGR
15,629
Evergy, Inc.
EVRG
15,206
% Total 11.69%
7.65% 7.32% 6.85% 5.55% 5.18% 4.50% 3.65% 3.54% 3.37% 3.14% 2.87% 2.78% 2.71% 2.67% 2.62% 2.33% 2.19% 1.95% 1.86% 1.81%
Company
Stock Symbol $ Market Cap
CenterPoint Energy, Inc.
CNP
14,359
PG&E Corporation
PCG
12,056
Alliant Energy Corporation
LNT
11,607
NiSource Inc.
NI
10,753
Pinnacle West Capital Corp.
PNW
10,570
OGE Energy Corp.
OGE
8,508
IDACORP, Inc.
IDA
5,073
MDU Resources Group, Inc.
MDU
5,067
Portland General Electric Co. POR
4,838
Hawaiian Electric Industries, Inc. HE
4,743
Black Hills Corporation
BKH
4,684
ALLETE, Inc.
ALE
4,294
PNM Resources, Inc.
PNM
4,067
NorthWestern Corporation
NWE
3,635
Avista Corporation
AVA
2,932
El Paso Electric Company
EE
2,654
MGE Energy, Inc.
MGEE
2,534
Otter Tail Corporation
OTTR
2,094
Unitil Corporation
UTL
891
% Total 1.71% 1.44% 1.38% 1.28% 1.26% 1.01% 0.61% 0.60% 0.58% 0.57% 0.56% 0.51% 0.49% 0.43% 0.35% 0.32% 0.30% 0.25% 0.11%
Total Industry
838,256 100.00%
Source: EEI Finance Dept., S&P Global Market Intelligence
XII. EEI Index Market Capitalization (at Period End)
$ Billions
800 700 600 500 400 300 200 100
-
Note: Change in EEI Index market capitalization reflects the impact of buyout and spin-off activity in addition to stock market performance.
U.S. Investor-Owned Electric Utilities EEI Index Market Cap (in $Millions)
Q3-03 Q4-03 Q1-04 Q2-04 Q3-04 Q4-04 Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11
288,073 314,324 329,601 323,193 342,460 380,305 395,663 425,989 454,727 428,825 422,899 432,848 464,281 503,858 525,088 515,565 514,946 514,486 456,711 482,024 404,472 361,921 316,070 343,844 363,185 389,672 377,281 360,044 402,014 407,275 411,164 433,236
Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19
442,352 471,635 450,597 475,083 479,540 463,916 507,163 505,091 499,776 504,365 548,006 587,735 557,472 632,185 596,851 549,164 568,250 576,819 662,574 706,366 658,728 659,845 690,205 708,329 722,423 720,427 692,282 716,350 724,766 731,313 790,291 838,256
EEI Q2 2019 Financial Update
4
STOCK PERFORMANCE
XIII. Comparative Category Total Annual Returns
U.S. Investor-Owned Electric Utilities, Value of $100 invested at close on 12/31/2014 175 150 125
100
75 12/31/2015
12/31/2016 EEI Index
12/31/2017
12/31/2018
Regulated
Mostly Regulated
Diversified
6/30/2019
EEI Index Annual Return (%) EEI Index Cumulative Return ($) Regulated EEI Index Annual Return Regulated EEI Index Cumulative Return Mostly Regulated EEI Index Annual Return Mostly Regulated EEI Index Cumulative Return Diversified EEI Index Annual Return Diversified EEI Index Cumulative Return
2014 100.00 100.00 100.00 100.00
Calendar year returns shown, except where noted. Diversified category eliminated in 2017 due to lack of constituent companies. Returns are unweighted averages of constituent company returns. Source: EEI Finance Dept., S&P Global Market Intelligence
The Fed cited concerns about weak global economic and financial conditions -- which some analysts attribute in part to the Trump Administration's trade tariffs -- in its January decision to keep rates steady. Then in July, the Fed lowered the overnight target rate by 25 basis points, its first rate cut since 2008.
The utility sector, widely seen as a defensive sector, typically underperforms a broad market advance. But the first half of 2019 also produced a surprising and steady decline in long-term interest rates in the U.S. and overseas.
In the U.S., the 10-year Treasury yield fell from a high of 2.8% in January to 2.0% by the end of June. Real GDP growth slowed to 2.0% in Q2 from 3.1% in Q1, while Q4 2018 was revised down to just over 1%. Overseas bond market trends likely also powered utility stock gains as longterm rates in most global regions have declined this year. In fact, global government debt with negative yields grew to nearly $12 trillion in principal value during the first half of 2019, up from $6 trillion in late 2018, while some 24% of investment-grade bonds globally had negative yields, all according to Bloomberg news reports.
The strange phenomenon of negative yields has colored global bond markets for several years. Yet the trend notably strengthened in the first half of this year. Most European
2015 (2.05) 97.95 (0.67) 99.33 (3.67) 96.33 (14.43) 85.57
2016 22.21 119.70 21.16 120.34 24.57 119.99 25.59 107.47
2017 11.56 133.54 11.66 134.37 11.32 133.58
-
2018 4.28 139.25 4.55 140.48 3.62 138.41
-
6/30/2019 15.96
161.48 17.14
164.57 11.90
154.88 -
XIV. EEI Index Top Ten Performers
For the six-month period ending 6/30/2019
Company
% Return
El Paso Electric Company Sempra Energy Southern Company Black Hills Corporation PNM Resources, Inc. NorthWestern Corporation MGE Energy, Inc. Xcel Energy Inc. WEC Energy Group, Inc. Entergy Corporation
32.0 28.9 28.8 26.2 25.4 23.3 23.1 22.4 22.1 21.8
Note: Return figures include capital gains and dividends. R = Regulated, MR = Mostly Regulated Source: EEI Finance Department
Category
R R R R R R R R R R
government bonds sport negative yields out to the six- to eight-year maturity. And in one widely noted development, the entire German government yield curve went negative in early August, all the way to the 30-year point.
In a global environment of slow economic growth and very low yields, investors seem to favor dependable earnings growth and steady dividend income wherever they can find it. Utility shares benefitted from this trend in the year's first half.
EEI Q2 2019 Financial Update
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